Gordon's long stint as Chancellor was still short of a full Pitt stop

Sunday 27 May 2007 09.40 EDT
First published on Sunday 27 May 2007 09.40 EDT

In a recent BBC interview Gordon Brown used the words 'when I was Chancellor' - an amusing Freudian slip, but possibly a confirmation that he has already given up serious Treasury work, as he tours the country demonstrating his 'Britishness'.

At the farewell party for that distinguished public servant Alastair Clark at the Bank of England last week there was much speculation about Brown's successor. The popular theory is that it will be fellow Scot 'safe pair of hands' Alistair Darling. Some favour David Miliband - but why should Miliband wish to abandon the environmental brief about which he is so passionate?

Sir John Major, in 1990, gave the chancellorship to Norman Lamont, his campaign manager; will Brown do the same for Jack Straw, thereby allowing Straw to join that rare breed, cabinet ministers with those three great offices of state on his curriculum vitae - Foreign Office, Home Office and Treasury?

On the other hand it would be a neat snub to George W Bush and Tony Blair if Straw, who appeared to be removed from the Foreign Office for daring to suggest that invading or launching a 'strike' on Iran was not a good idea, were to be reinstated.

Brown may not yet have made up his mind. As the Bank of England knows only too well, appointments to the monetary policy committee are very much a last-minute affair. Indeed, although the possibility was on his and Ed Balls's minds for years, the Chancellor did not finally opt for an independent MPC until the weekend before the 1997 election.

It is not just for the innovation of the MPC that Brown's chancellorship will go down in the history books. He is the longest continuously serving Chancellor since Nicholas Vansittart, who served just over 10½ years (from June 1812 to 1823) compared with Brown's 10 years and two months.

Just think! If Tony Blair had decided to linger on until the end of the year, Brown's would have been the longest serving chancellorship since William Pitt (the younger) - 17¼ years from December 1783 to March 1801. Of course, a longer chancellorship for Brown would have meant an even shorter premiership than predicted by those who forecast a Conservative victory at the next election. You can't have it both ways - although in the old days you could: Pitt managed to combine the premiership and the chancellorship, as did Lord North (Chancellor 1767-1782 and Prime Minister from 1770-1782) and Sir Robert Walpole, the first 'official' Chancellor of the Exchequer, for 21 years from 1721 to 1742. They don't come like Walpole any more.

The Brown-Vansittart comparison relates to a consecutive period in office. Gladstone was Chancellor for 12¼ years all told, but split between four different periods. With his strict limit of 40 per cent as the permissible ration of net public sector debt to gross domestic product Brown cannot compare with Vansittart, who saw the tail end and aftermath of the Napoleonic Wars and presided over a national debt GDP ratio of 290 percent in 1815. The nation somehow survived.

Although it is a permanent stain on New Labour's escutcheon, the Iraq war was not such a strain on the nation's finances. Vansittart's revenues were not assisted by the abolition of income tax in 1816 (Pitt had reluctantly introduced it in 1799).

Vansittart was every bit as good as Gordon Brown at running up budget deficits but managed to check out with a surplus in his last year - beating the present Chancellor in this respect too (the 2006-2007 current deficit is now estimated at £7.6bn). Incidentally, while the UK public finances are still in deficit, the deficit is somewhat less than the Treasury had been forecasting, and officials believe higher revenues are associated with an even stronger expansion than had been assumed - thereby perhaps contributing to the MPC's view that interest rates have still some way to rise (and they ought to know).

I'm not so sure that, while always backing the MPC 'in its tough decisions', the Chancellor or the Treasury is quite so keen on some of the wilder bank-rate forecasts in town (7 per cent for instance); but the situation is out of their control. And it may be that the 3.1 per cent figure in March (now down to 2.8 per cent in April) was just the scare the hawks on the MPC were looking for to frighten the doves.

But let us return, this Bank Holiday weekend, to the history books. Gordon Brown and Gladstone may have more in common than the outgoing Chancellor thinks. Both chalked up a record period in office, and each is known for a dour approach to the nation's finances - indeed the epithet 'Gladstonian' entered the dictionary to denote a stern, 'balanced budget' approach.

But as every hospital patient knows, we have recently gone through a period when public spending has risen a lot faster than GDP. Just as there are those who think Brown has been less prudent than he professes to be, there was also another side to the famous Gladstone. In his biography of Gladstone, Roy Jenkins noted that 'public expenditure at the time of the 1853 budget was approximately £52m. In the seven years between this and his second budget it has risen to around £70m, a rate of increase totally disproportionate to the growth in national wealth, rapid although that had been.' Gladstone was Chancellor during the early years of this explosion in public spending, and duly raised income tax when he returned to the Treasury.

So it remains a puzzle to me why, given the current deficit during the period of rapid expansion of which he has often boasted, Brown lowered income tax in his recent budget.